Wednesday, July 02, 2008

Sugar production in Armenia.

Here is an interesting recap of how the attempts to set up a sugar production facility in Armenia failed. It is Kafkaesque but that's the reality of how things are done in the country.
[...] The ASC continued to work closely with the Armenian Government, and letters of support were received from Karen Tschmaritian, Minister of Trade and industry, David Lokian, Minister of Agriculture, Hovik Abrahamyan, Minister for Territorial Affairs, Merujian Michaelian, Deputy Minister of Finance & Economy, Serzh Sargsyan, Minister of Defence and Armenian Representative of the Armenian Russian Commission for inter-Governmental Development, and yes, a letter from President Kocharian, who committed his full support to the project.[...]

[...] By 2003, together with Sudeco International, the Armenia Sugar Corporation had committed major financial and human resources to the project, a full business plan had been prepared, in English and in Russian, and a 62-hectare site was approved for the factory to be built near to Akhurian in the Shirak Marz. The project was submitted to Tigran Davtian, Deputy Minister of Trade & Industry (now Minister of Finance), who was to register the project on behalf of the Government, as per resolution of the Presidential Commission of January 2002. But Davtian would not even look at the project, let alone register it so that it could proceed. Davtian said: ‘Bring a Mitsubishi to me and I might consider an application'. For that reason, and because of repeated rebuffs by the Armenia authorities, to date Armenia does not have a sugar industry. And despite Robert Kocharian showing off what he promised would be yet another new sugar factory in the run-up to the recent Presidential election, he will not allow a new sugar industry, because it would jeopardize the tens of millions of dollars his man gets each year from cheap, low-quality imported sugar.[...]
Read the full story on Khosq.


Anonymous said... register the project on behalf of the Government .....

what's this, there is no procedure of registering projects at government in Armenia, can someone explain it?

Bruce Tasker said...

I can explain it!

A sugar industry for Armenia (or for any other country) could not succeed without a certain level of Government support, and that is explained in my posting on khosq, from where this posting is taken. The Government promised that support in a string of letters, but in order to secure that support the project needed to be registered with the Government and an agreement signed. Tigran Davtian, today's Minister of finance, refused to even look at the project.

Anonymous said...

I read your article at khosq

1. you want to be above the law and don't pay duty which all others are paying /for using Armenia in company name/

2. I still don;t understood what is "registration of the project" I am well aware of dozens of projects which require public guarantee. If that's the case, the answer from Armenia was always *go to hell*, and there should not be any exception.

Bruce Tasker said...

Anonymous: Poor quality sugar is imported into the republic, which now sells for about 95 cents a kilo. That sugar could be sold very profitably at less than 50 cents per kilo, but because it is an import monopoly, it sells at a much higher price than necessary. The support promised by the Government was to protect the new industry from 'dumped' imported sugar, in accordance with WTO guidelines, i.e. to protect the new industry against sugar importers suddenly dropping the price of their low quality sugar below a predetermined level.

The matter of public guarantee was not a question, although contrary to common belief, and to your statement *go to hell*, many credits, including from the World Bank, require a sovereign guarantee - and get one (another little state secret).